Advanced Micro Devices on Tuesday said it would release “very low-power” Shanghai processors within three months, a move that could intensify its ongoing chip battle with rival Intel.

The new quad-core Opteron EE chips will deliver similar performance while drawing significantly less power than its predecessors, a company spokeswoman said. AMD’s server processors draws a minimum of about 50 watts of power.

The Opteron EE server chips could become available in the next three months. The chips will be manufactured using a 45-nanometer manufacturing process and will be part of the Opteron processor family codenamed Shanghai.

AMD is also making progress with its upcoming line of six-core server processors, codenamed Istanbul.

In addition to adding two more cores, AMD is adding power management technologies and improvements to boost the chips’ performance, said Margaret Lewis, a product marketing director in AMD’s server and workstation division. The company hopes the Istanbul chips will deliver improved performance while drawing the same amount of power as existing quad-core Shanghai server chips.

The Istanbul chips are based on the Shanghai core, with the “same energy efficient parts” and additional cache, Lewis said. She didn’t provide further details of the technologies, but said the tweaks should help the chip handle heavier processing loads.

The Istanbul chips are due in the second half of the year, Lewis said. Server vendors Dell and Hewlett-Packard will support Istanbul processors on their servers when the chip is released, according to the companies.

AMD’s announcements come a day after Intel announced new quad-core Xeon server chips, which the chip maker is pitching as the most significant revamp of its server chip line since the release of the Pentium Pro in 1995. The launch took away AMD’s long-standing technology advantage of integrating a memory controller on the CPU.

“We’re pleased to see our competitor come to use the [integrated memory controller] technology we introduced way back in 2003,” Lewis said.

It’s hard to directly compare Intel’s and AMD’s servers chips as they are based on different architectures, said Dean McCarron, principal at analyst firm Mercury Research. The chip makers compete for market share, and are pushing the boundaries in the areas of price, performance and some other metrics, he said.

Savvy server buyers look for value and take a number of cost factors into consideration, including workload utilization and power consumption of chips. That has led the chip makers to pack more power into chips via the addition of cores, which also helps reduce power consumption, McCarron said.

Adding more cores makes sense as companies look to consolidate servers and run more applications in virtualized environments, he said. Servers equipped with faster chips can execute more tasks compared to slower servers, which could help consolidate servers in data centers.

In anticipation of the first big jump out of quad-core chips, AMD demonstrated the first working units of Istanbul in February. A company representative at the time said servers with eight sockets could include up to 48 cores with Istanbul chips. Intel already ships a six-core chip for servers, known as Dunnington.

In 2010, AMD will double the core count on its processors to twelve with a chip codenamed Magny Cours, which will support the faster DDR3 form of memory. Intel is also continuously adding more cores, and will release new six-core and eight-core chips later this year or early next year.

Unfortunately for both players, the product launches are happening at the backdrop of an economic collapse, McCarron said.

“That will mask the business performance of the product. We’re in a different environment,” McCarron said.